Over the weekend, China’s Harbin Bank said it was now under government control. That comes months after Chinese authorities seized control of another small lender, Baoshang Bank, and state institutions took stakes in a third, Bank of Jinzhou. Bank runs have erupted elsewhere. Several other lenders have yet to file 2018 annual reports, in another sign that the problems are more widespread. Here’s how China’s banking system works—and what’s going wrong.
China’s banks come in various flavors. There are a handful of giants, and a few more medium-size banks that can also operate nationally. Below that lies a bigger cohort of city commercial banks, and more than a thousand tiny rural commercial lenders. Both city and rural banks have their roots in local credit unions, and tend to have limited geographic reach. Cracks are emerging at some small and midsize banks after years of rapid growth
There are 1232 words left in this subscriber-only article.